Seoul: The government announced a new initiative to roll out a series of tax incentives aimed at assisting vulnerable groups, small merchants, and strategic technology industries in an effort to spur economic growth and stability, according to the finance ministry.
According to Yonhap News Agency, these measures form part of an amendment to enforcement decrees related to the government's tax reform, which was approved by the National Assembly late last year. The Ministry of Economy and Finance highlighted that the initiative will primarily focus on expanding tax support for low- and middle-income earners to stabilize their economic conditions.
Key elements of the plan include exempting interest income from taxation for individuals below a specific income threshold and young small business owners with youth savings accounts. Additionally, the government intends to widen the scope of factory workers eligible for tax exemptions on night-duty and overtime allowances.
The plan also encompasses enhanced tax support for small merchants, particularly those seeking to restart operations after closure. This includes establishing legal mechanisms to waive unpaid tax liabilities up to 50 million won (approximately US$34,000) considered difficult to collect.
"The measures are aimed at stabilizing people's livelihoods through an inclusive tax system," stated Park Hong-ki, a ministry official. These steps are part of the government's ongoing efforts to rationalize the tax framework.
A significant boost will be provided to strategic industries as the government expands the definition of "national strategic technologies" to foster key industries. In the semiconductor sector, this includes technologies related to advanced materials and components for next-generation multi-chip modules. Additionally, the future mobility and transport sector will see the inclusion of environmentally friendly advanced ship technologies, such as liquefied natural gas (LNG) cargo containment and propulsion systems.
Companies investing in these designated technologies will have the opportunity to receive tax credits of up to 50 percent on research and development (R and D) costs, as stated by the ministry. The plan will impact a total of 21 enforcement decrees, with the government intending to submit the amendment for Cabinet review in mid-February and complete its promulgation by the end of the following month.